Multi-strategy hedge fund manager Elliott Management Corporation has completed its proposed acquisition of a controlling interest in Aeolus Capital Management Ltd., a leading insurance-linked investment manager focused on collateralized property catastrophe reinsurance and retrocession.
Elliott, a hedge fund manager with two main strategies and assets under management of around $30 billion, acquired the controlling interest from Aeolus founder Peter Appel and key shareholder since 2012 Allied World Assurance Company.
The transaction saw Elliott Associates, L.P. and Elliott International, L.P., the two hedge funds managed by Elliott, taking a controlling stake in Aeolus and its affiliated entities through share purchases from Appel and Allied World.
After the transaction, Appel continues to hold significant minority interest in Aeolus and will take on the role of Non-Executive Chairman. Allied World has also retained a minority interest and is set to continue to provide capital to the investor vehicles managed by Aeolus.
There will be no changes to the senior management team at Aeolus, with Andrew Bernstein, Chris Grasso, Trevor Jones and Frank Fischer, all continuing in their current roles and retaining their equity stakes in the ILS management firm.
Elliott has already had interests in reinsurance through its investments, but the stake in Aeolus will enable it to bring ILS and collateralized reinsurance returns directly into its strategies, while it will also be able to help Aeolus expand its reach and profile through the Elliott investor base and marketing channels.
The transaction is evidence of the growing attraction that a wide range of investors and asset managers have towards reinsurance linked returns through ILS funds and vehicles. Further transactions of this kind cannot be ruled out in ILS, as managers look for channels that can help them gain scale, while investors target the diversifying benefits of insurance linked returns.